Issue #64: My Baby Yoda baby fever begets big savings

October 14, 2020 // ISSUE #64

Hi y’all —

Baby Yoda is set to grace our TV screens once again when The Mandalorian returns at the end of this month, and I, for one, cannot wait.

As you may remember me explaining at length last year, I’m a huge fan of Baby Yoda. He’s wrinkly and smol and mysterious. He’s violent but in a defensive way. I love the little sphere he travels around in, I love the memes he inspires, and I love the dumb merchandise with his face on it flooding the internet. (Baby Yoda being held up by the Pope never gets old.)

If I’m being honest, I’m a sucker for anything baby-related. Baby Chanco, Baby Driver, baby spinach, “Baby” by Justin Bieber ft. Ludacris, Mini Babybel cheeses, the One Direction fake baby conspiracy theory… I like them all. I’m far from having kids of my own, but I’m permanently suffering from baby fever.

It’s with this in mind that I started thinking recently about how to prepare for my eventual mini me. Unlike Baby Yoda, they’re going to have to live on Earth, and that means they’re going to need money. Should I save for my kids if I don't have any kids?

I linked up with Trina Patel, a financial advice manager working with Albert. She told me, aliens aside, that it’s not a ridiculous thought.

“It’s such an important question that’s often overlooked until people are in that place and feel ready,” Patel adds. “Then they’re like, ‘Oh. Wait. I haven’t financially been ready.’”

My exact gameplan depends on my timeline. If I’m in a position to have children soon, I probably want to come at this differently than if I’m single and it’s a far-off prospect. If I’m preparing to conceive or adopt, I probably want to think about it differently than if I’m considering freezing my eggs.

All of those things have distinct price tags attached, but it’s not a bad idea to start thinking now about how I can change my lifestyle to shore up savings.

“The earlier you can do it, it’ll feel like you have more options later in life,” Patel says.

Having a kid is expensive. According to the United States Department of Agriculture’s most recent Expenditures on Children by Families report, middle-class married couples spend nearly $234,000 on food, shelter and other necessities in the first 17 years of a child’s life.

That’s a quarter of a MILLION dollars, you guys. And that number only factors in the basics — not Little League fees, field trip checks, ER bills when they crack their head open running circles around the dining room table at high speed, et cetera.

Patel said I should do some research, figure out how much money I’d like to save and then make a plan for how to reach my goal. If I have a couple years before I’ll need the cash, I may want to invest the money using a capital preservation strategy that’s not too high-risk. If I’m looking to have kids sooner rather than later, I might want to set up a high-yield savings account and earn interest.

She added to make sure my money is growing with inflation and not losing its purchasing power sitting somewhere. This is another place where beginning early is beneficial: Time can help even out fluctuations in the market. (Like the ones we’re seeing tank interest rates at online banks right now.)

I can also take advantage of custodial accounts set specifically designed for people to save for kids. One option is the Coverdell education savings account, which is set up to pay for a beneficiary’s qualified school expenses at the elementary, secondary and higher education levels. There are also accounts under the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA), which let adults hold assets like stocks and bonds on a minor’s behalf until they turn a certain age.

These all have tax pros and cons that are too intricate for me to get into right now. But perhaps the most popular option is a 529 plan.

College is a colossal expense: According to the National Center for Education Statistics, tuition, room and board at a public college costs nearly $18,000 a year. 529s can help with that burden, says Ksenia Yudina, founder and CEO of college savings app UNest. They grow tax-free over time if used to cover qualified expenses associated with a child’s education — think tuition, textbooks and laptops.

Yudina said one cool thing about 529s is that I can actually set one up for my kids before they’re born. I can make the account in my name and then change the beneficiary once they have a Social Security number. Another is that people other than myself can contribute to 529 plans — grandparents and friends can give money that way instead of wasting it on random Kohl’s gift cards or whatever.

“It’s very simple if you do it the right way and use the right platform,” Yudina says. “Even [a] small investment, if you make it consistently and allocate the savings on autopilot, over time it can make a huge difference.”

THE BOTTOM LINE

(but please don't tell me you scrolled past all of my hard work)

I should put my baby fever to good use and start putting away money for my kids. I can use a high-yield savings account, investment account, custodial account or 529 plan to do so. Patel said I shouldn’t do this in place of taking care of my own future plans and retirement accounts, but it’s smart for young people to get the ball rolling.

“They don't need to wait to start saving for existing kids or future kids,” Yudina adds. “Build the financial cushion.”

via GIPHY

RECEIPT OF THE WEEK

check out this crazy celebrity purchase

via Instagram

Podcaster Joe Rogan dropped over $14 million recently to buy a new mansion on a lake in Austin, Texas. Rogan’s new digs include 10 bathrooms, eight bedrooms, four acres, two garages and a saltwater pool. He has big plans for the Lone Star State, saying that he aims to set up a comedy-club-slash-shooting-range on a nearby ranch. And also serve barbecue. Did I mention his neighbor is Sandra Bullock? Sounds like an Experience, indeed.

INTERNET GOLD

five things I'm loving online right now

1	The Army has adopted a new high-tech strategy: napping. The most updated version of its Holistic Health and Fitness manual recommends “short, infrequent naps to restore wakefulness and promote performance, according to the New York Times. I am a journalist, not a soldier, but I will implement this advice immediately. It’s the patriotic thing to do.
2	I highly recommend you make these pumpkin cheeesecake brownies ASAP. (Put chocolate chips in the brownie batter if you want to take them to the next level.)
3	My boss, who has shepherded this newsletter for over a year now, published a book yesterday! Because he reads the first drafts of all my bad jokes, I feel I should at least shout it out. One Last Song has an objectively cool premise — if you could choose the last song you'd hear before you died, what would it be and why? — and includes input from musicians like Andre 3000 and Regina Spektor. Check it out here.
4	Why are these Samoyeds randomly by this peaceful stream in the woods and how can I teleport there?
5	The /r/Europe subreddit held a contest where people reimagined what the lo-fi hip-hop radio girl would look like if she were relaxing/studying in different countries. Here are the winners, and here are some runner-ups. I particularly like 70s Poland and Scotland.

401(K)9 CONTRIBUTION

send me cute pictures of your pets, please

via Kristine Black

Meet Marshall, who is aptly dressed as Marshall from Paw Patrol. Marshall has been saving money for his eventual puppies because he wants to be the ultimutt dad.

The Baby Yoda hype is real. Watch the trailer again, I think I will.

See you next week.

Julia

P.S. I got a ton of feedback last issue about authorized users! Scholars John and Cathy recommended getting my little bro a Discover secured card as opposed to putting him on my account. Scholars Butch, Bill, Dianne and Kathy all had the same tip: to add him to the account but never actually give him the credit card so he's not tempted to overspend. You guys are sneaky and I LIKE IT.

P.P.S. What are your thoughts on saving for kids? What’s longest nap you’ve ever taken? Is Baby Yoda the cutest or what? Slide into my inbox at

julia.glum@money.com or @SuperJulia.

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Issue #64: My Baby Yoda baby fever begets big savings

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